Egypt’ EGX 30 Leads in Africa; Ghana Retains Best Growth YtD

Though figures used were as at Thursday February 22, 2018 as against February 23 for the other markets, the Egyptian stock market, closing Thursday at 15,318.92 was ahead of other in the week with a week-on-week growth of 2.36%. Except if there was a sharp decline to eventually close the week, the market stands to retains its WoW position in the continent. EGX 30 had closed in the previous week at 14,965.93.

Uganda recorded a decline of 0.74% to emerge the worst performer. Though the market was up Friday, its WoW records however show a decline of 0.69%.

YtD, Ghana’ GSE Composite index with a growth of 29.34% remains the best though the market was down marginally by 0.05% last week. it was also the best MtD with a growth of 8.44%.

KENYA:

Kenya raises $2bn in fresh Eurobond issue:

Kenya has raised Sh202 billion ($2 billion) in a new sovereign bond issue that was closed on Wednesday of last week, says the National Treasury. The bond has been issued in two equal tranches of 10 years at a coupon of 7.25 per cent and 30 years at a coupon of 8.25 per cent.

The bond, which is being listed on the London Stock Exchange (LSE), was highly oversubscribed, attracting bids worth $14 billion (Sh1.4 trillion), which the Treasury says is an indication of confidence in the long term prospects of the Kenyan economy by international investors. “The funds will be applied towards the government’s development initiatives and liability management. We will continue to invest in the infrastructure and capacity to roll out these programmes,” said the Treasury in a statement.

The issue which was arranged by global lenders Citi, JP Morgan, Standard Bank of South Africa and Standard Chartered, being the second Eurobond issue by Kenya, the first being the $2.8 billion that the country borrowed in 2014 in five and 10-year tranches is expected that some of the funds will go towards rolling over some of the existing international debt on Kenya’s books.

The five year paper matures in June 2019, meaning that the government has been under pressure to secure funds to roll it over alongside a $750 million syndicated loan whose redemption was extended to April this year from last June.

SOUTH AFRICA:

South Africa raises VAT for first time in 25 years as Rand soars last week:

South Africa’s new leadership announced on last week it was taking the politically risky step of raising value-added tax for the first time in 25 years, part of efforts to cut the deficit and stabilise debt under new President Cyril Ramaphosa. The move to raise VAT to 15 per cent from 14 starting in April is expected to generate an additional 23 billion rand ($2 billion) of revenue in 2018/19.

The government of Africa’s most industrialised country has to plug a revenue hole in its budget and repair its economy after nine years of mismanagement under the scandal-plagued Jacob Zuma.

Rand firmer amid talk of a new cabinet Stocks rise led by banking shares.

South Africa‘s rand firmed on Friday amid talk that new President Cyril Ramaphosa is likely to announce a new cabinet after a party meeting over the weekend. Stocks rise was led by the banking sector.

Ramaphosa has said he is considering a cabinet reshuffle after replacing Zuma. The former president’s nine-year rule was marred by a series of scandals. Ramaphosa also pledged to fight official corruption.

By 5am Saturday, the rand was trading 0.81% firmer at 11.55 per dollar, touching a three-year high scaled last week after the resignation of Jacob Zuma as president.

The rand benefited from rumours that the ruling African National Congress would discuss appointing a new cabinet during a two-day meeting starting last weekend. The imminent cabinet reshuffle is believed to confirm hopes of a political and economic reversal thus supporting the rand further – at least short term.

In fixed income, government bonds were slightly stronger, with the yield on the benchmark instrument due in 2026 down 0.5 basis points at 8.030%.

On the bourse, the benchmark Top-40 index rose 0.95% to 51,747 points while the All-Share index lifted 0.96% to 58,715 points.

Stocks rose led by the banking sector, which is considered the barometer of South African political and economic sentiment. The banking index rose 2.03% and with Barclays Africa Group up 3.20% to 203.88 rand and FirstRand lifting 2.38% to 76.07.

Further gains were curbed by Northam Platinum which fell 2.55% to 42.88 rand after the mid-tier South African miner reported a widened half-year loss citing costs related to a transaction to increase its black ownership profile.

The Bank of Zambia (BOZ) cut its policy rate by another 50 basis points to 9.75 percent and has now cut it by 575 points since embarking on an easing cycle in February 2017. This was done to continue to ease its monetary policy stance by cutting its policy rate and the reserve requirement to support economic growth and promote a stable financial system, and forecast inflation in the lower bound of its inflation target over the next eight quarters.

The statutory reserve ratio was also cut by another 300 basis points to 5.0 percent, bringing the total reduction in the ratio to 13.50 percentage points since February 2017. “Changes in the Policy Rate will continue to be guided by inflation outcomes and forecasts as well as progress in fiscal consolidation,” the BOZ said.

The rate cut comes at a time of uncertainty over whether Zambia – whose economy is starting to rebound after the rise in copper prices and good rains – will obtain a $1.3 billion, extended credit facility from the International Monetary Fund (IMF). In August 2017 discussions between the IMF and Zambia were put on hold after the IMF said the government’s borrowing plans threatened debt sustainability, requesting “credible borrowing plans.” But on Feb. 16 the IMF again rejected the government’s borrowing plan. “Against this background, future program discussions can only take place once the Zambian authorities implement credible measures that ensure debt contraction is consistent with a key program objective of stabilizing debt dynamics and putting them on a declining trend in the medium term,” the IMF said last week.

GHANA:

MTN Ghana is said to appoint IC Securities as IPO sponsor MTN preparing to raise $447 million in offering 35% of shares:

Africa’s biggest mobile-phone company by subscribers is preparing to raise as much as 2 billion cedis ($447 million) through listing 35% of the subsidiary on the Ghana Stock Exchange in what will be the largest share sale in the country’s history. The sale will help MTN meet conditions agreed to in 2015 when it acquired the right to use spectrum that can carry high-speed mobile data for customers. The Group’s Ghanaian unit has thus appointed local brokerage IC Securities Ghana as its main sponsor for an upcoming initial public offering in the West African nation, according to five people familiar with the matter.

MTN and the Securities and Exchange Commission, the market regulator, are still in talks to finalise the sale’s prospectus, said two of the people, who asked not to be identified because a public announcement hasn’t been made. MTN is expected to submit a final draft within two weeks, they said.

MTN was granted a 15-year license for fourth-generation spectrum on condition that Ghanaian investors own 35% of the business.

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